Correlation Between Locorr Dynamic and New Economy
Can any of the company-specific risk be diversified away by investing in both Locorr Dynamic and New Economy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Locorr Dynamic and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Dynamic Equity and New Economy Fund, you can compare the effects of market volatilities on Locorr Dynamic and New Economy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Locorr Dynamic with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Dynamic and New Economy.
Diversification Opportunities for Locorr Dynamic and New Economy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Locorr and New is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Dynamic Equity and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Locorr Dynamic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Locorr Dynamic Equity are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Locorr Dynamic i.e., Locorr Dynamic and New Economy go up and down completely randomly.
Pair Corralation between Locorr Dynamic and New Economy
Assuming the 90 days horizon Locorr Dynamic Equity is expected to generate 0.23 times more return on investment than New Economy. However, Locorr Dynamic Equity is 4.3 times less risky than New Economy. It trades about -0.15 of its potential returns per unit of risk. New Economy Fund is currently generating about -0.16 per unit of risk. If you would invest 1,175 in Locorr Dynamic Equity on September 23, 2024 and sell it today you would lose (19.00) from holding Locorr Dynamic Equity or give up 1.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Locorr Dynamic Equity vs. New Economy Fund
Performance |
Timeline |
Locorr Dynamic Equity |
New Economy Fund |
Locorr Dynamic and New Economy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Locorr Dynamic and New Economy
The main advantage of trading using opposite Locorr Dynamic and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Dynamic position performs unexpectedly, New Economy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Economy will offset losses from the drop in New Economy's long position.Locorr Dynamic vs. Locorr Market Trend | Locorr Dynamic vs. Locorr Market Trend | Locorr Dynamic vs. Locorr Market Trend | Locorr Dynamic vs. Locorr Spectrum Income |
New Economy vs. Locorr Dynamic Equity | New Economy vs. Us Strategic Equity | New Economy vs. Ms Global Fixed | New Economy vs. Cutler Equity |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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